CBA Introduces New Policy: Off-the-Plan Buyers Require Only $10,000 Down Payment — Sydney Auction Clearance Rate at 70%

Week’s Key Focus

The Australian Financial Review reports that the Commonwealth Bank of Australia (CBA) has recently introduced a new home loan policy allowing off-the-plan property buyers to secure a home with just a $10,000 deposit. The remaining amount will be guaranteed by the property technology platform, Coposit. This initiative aims to help more potential homebuyers enter the market and provide developers with the necessary financing to commence construction.

This policy comes at a time when off-the-plan projects have struggled to get off the ground, as lenders have been favoring higher-margin luxury developments over residential projects targeted at first-time buyers. Surveys indicate that in some cases, lenders require developers to secure over 80% of funding through pre-sales before granting loans for off-the-plan projects.

Mike Vacy-Lyle, CBA’s Executive General Manager of Business Banking, stated that this measure will make it easier for homebuyers to purchase their first home while ensuring that housing developments are not delayed due to financing issues. “Housing affordability and supply shortages are among the most pressing issues in the Australian property sector. This plan will provide greater certainty for developers and increase market supply,” Vacy-Lyle said.

Currently, these off-the-plan projects are located in New South Wales, Queensland, and Victoria, but Coposit plans to expand the program to Western Australia early next year.

Under the CBA-Coposit plan, buyers need to pay just $10,000 of the 10% deposit to secure an off-the-plan property. They will then make interest-free weekly payments during the construction phase, transitioning to a traditional mortgage once the project is completed.

The Australian Financial Review noted that developers are motivated to join the Coposit platform because CBA will treat the initial $10,000 deposit as a full 10% deposit for loan approval purposes. If buyers cannot pay the full 10% deposit, developers can choose to relist the property or allow deferred payments.

This innovative policy not only offers greater flexibility for buyers but also provides developers with enhanced financing opportunities, which is expected to have a positive impact on the Australian real estate market.

Rouse Hill

Auction Results Last Week

Sydney: 785 properties were auctioned, with results reported for 521, resulting in 363 sales. The clearance rate was 70%, with a total auction value of AUD 459,392,920 and a median house price of AUD 1,620,000;
Melbourne: 1,028 properties were auctioned, with results reported for 749, resulting in 468 sales. The clearance rate was 62%, with a total auction value of AUD 386,092,353 and a median house price of AUD 1,025,000.